Panama Papers: Developer used firm to shield assets from Nama

Developer Ray Grehan used the law firm at the centre of the Panama Papers investigation to shield assets from the National Asset Management Agency (Nama).

Mr Grehan transferred his quarter share in a €50 million Dutch casino in 2011 to a company in the British Virgin Islands (BVI) called Subiaco, established by Mossack Fonseca. Nama took over Mr Grehan's debts of €300 million in 2010.

Members of The International Consortium of Investigative Journalists, which includes The Irish Times, have spent more than a year examining a cache of 11.5 million documents and records from Panama-based Mossack Fonseca, one the biggest providers of offshore services to individuals, companies and middle men who advise them.

Mossack Fonseca told regulators in the British Virgin Islands in March 2012 that the beneficial owner of the company was Marcelino Alvarez Garcia, with an address in Spain.

They added that there was no reason for Mr Grehan “to be connected to our corporation”.

This was despite Mr Grehan admitting ownership of the company – along with one of his children – the previous month under questioning in the high court in London.

Enforcement proceedings

The agency had begun enforcement proceedings against Mr Grehan in late 2011 after it became aware that the developer had not disclosed all his assets and obtained a worldwide “freezing order”.

Shortly afterwards, Mr Grehan declared himself in bankrupt in the UK.

Nama continued to pursue Mr Grehan and he told the London court in April 2012 that he had transferred his 26 per cent interest in the casino to Subiaco in August 2011 for €1.

He said Subiaco was 75 per cent owned by his daughter and 25 per cent by himself.

He denied the transfer was aimed at depriving his creditors and was done at the behest of his co-investors, who did not want to be dragged into Nama.

Documents indicate that Mossack Fonseca was aware of the court proceedings against Mr Grehan when they told the BVI regulator Mr Grehan was not involved with Subiaco.

In an internal email [translated from Spanish], a Mossack Fonseca employee referred to legal proceedings and noted: "Mr Grehan was declared bankrupt and the courts in Ireland and the UK are handling insolvency proceedings, and have discovered the link of this person [to] Subiaco BVI company".

Despite this, a formal response was prepared for the BVI regulator by Mossack Fonseca saying that Mr Grehan had no connection with the company.

It included a letter to the regulator from the company, written by a Geneva-based financial adviser who was a director of Subiaco, denying any connection with Mr Grehan.

It was clear from email correspondence that some Mossack Fonseca staff were uneasy with such a categorical response, particularly because a Mossack Fonseca employee was a nominee director of Subiaco.

Subiaco was wound up in July 2013 “because of the company’s inactivity”.

Its assets and liabilities were stated as nil and Mr Alvarez Garcia, with an address in Asturias in Spain, was listed as the sole shareholder.

It is unclear if Nama recovered any money from Subiaco.

However, Mr Grehan is still subject to bankruptcy restrictions until 2021 and Nama will be a beneficiary of ongoing actions by the bankruptcy trustee to trace and realise Mr Grehan’s assets.

In 2014, Mr Grehan agreed to a bankruptcy restriction order in the UK for seven years after failing to fully disclose his assets. Mr Grehan gave an address in Nigeria.

Specific matters

Nama declined to comment yesterday and calls to Mr Grehan’s mobile phone were not returned.

Mossack Fonseca said in a statement yesterday that it would not be commenting on “specific matters”.

The EU yesterday pledged to intensify its clampdown on international tax avoidance amid increasing public anger at the revelation of the elaborate global system revealed by the International Consortium of Investigative Journalists.

As authorities around the world responded to the leaked Panama Papers, the EU warned that there was “plenty more to come” in its response to corporate and individual tax avoidance.

*This article was edited on April 21st, 2016.